Is There Big Trouble Ahead for the Greek Property Market

To be fair, things were looking better in Greece after a long time. The property market looked like it had bottomed out and home prices were set for a quick upturn. The optimism was returning, albeit slowly.

Residential property prices in the country only declined by 0.6 percent through the last quarter of 2016, which was a major improvement over the previous 12-month period when the decline was 5 percent. Athens was the most resilient with home prices dropping by only 0.4 percent here. The city was helped by the big tourism boost that it received in 2016.

In fact, tourism in Greece has been one of the saving graces of the economy. A record number of tourists visited Greece in 2016, over 28 million. That made 2016 the best year ever for the tourism industry in Greece.

And yet, there is no question that the Greek economy has suffered. The property market has paid the price for the mismanagement of the economy as well. Home prices in Greece have declined by 40 to 50 percent since the start of the crisis.

Now, things look like they are going to get worse because of the renewed tension between Greece and its creditors, such as the European Central Bank, the International Monetary Fund and the World Bank. Greece finds itself having to pay off a loan of 7.6 billion EUR soon. Otherwise, there could be a major balance of payment crisis to hit the country.

Greece has to pay off such a huge loan just when it badly needs more funding to support pensions and salaries of public sector workers and the various social security schemes. The talks with the international creditors are at a critical stage right now, and it can be matter of make or break for the national economy.

There are serious problems in Greece – the unemployment rates are very high, at 24 percent. There are strict capital controls in place and banks are holding back on the lending because of non-performing assets that are worth 60 percent of the GDP.

Still, business in the Greek Islands such as Crete, Rhodes, Samos and Mykonos, to name a few, has been just perfect. In fact, it’s like the Greek Islands are on an entirely different planet – the so-called Greek crisis has never affected life here.

There are a number of wealthy international investors who are still very much interested in buying overseas property in Greece, especially in the islands. These are highly sophisticated cash rich investors from emerging nations such as China and Russia who are always on the lookout for a great bargain, such as a beachfront villa in Mykonos which was worth $25 million in 2007, but can have purchased now for just $5 million.

Similarly, there are a number of wealthy individuals from Germany, Switzerland and Scandinavia that have shown interest in buying holiday homes in the Greek Islands. So you can still sell overseas property quick in Greece, even in the current scenario.

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